Authorities in race to seize Madoff assets

In what might sound like a remake of the Keystone Cops, officials and prosecutors ended up in court in a race to see who will get ultimate control of Bernie Madoff's assets. In the past couple of days, we've learned that French officials may be gearing up to seize Ruth Madoff's chateau in France. Securities Investor Protection Corporation Trustee Irving Picard and U.S. prosecutors locked horns in court over who should have control over the London operation. We also learn that U.S. prosecutors have been in contact with the Serious Organised Crime Agency and Serious Frauds Office in the United Kingdom.

Picard raised the tally for the amount of assets found to $1 billion after tracking $75 million in assets of Bernard L. Madoff Securities in Gibraltar, according to a report in Bloomberg. The chateau that French authorities have their sights on is valued at about $1.6 million.

Yesterday the court battle revolved around who should control which seized assets. Picard wants the power of attorney over Madoff's U.K. unit. U.S. prosecutors want the power to be held in escrow, since they believe the London operation "may well be inextricably intermingled" with the U.S. operation and their criminal investigation could be hindered if Picard assumes control. Picard's attorney told U.S. District Judge Louis Stanton in New York he needs the power of attorney to quickly recover assets for Madoff's customers, many of whom are in desperate need of the money.

Right now control over Madoff's international operations rests with the U.S. court-appointed receiver, Lee Richards. He has announced his plans to step out of the game because he believes his receivership role is redundant with that of U.S. prosecutors, Picard and U.K. liquidators.

Stanton did not rule on the U.K. power of attorney thicket at yesterday's hearing. But Picard did have the opportunity to show how money moved regularly from the U.S. operations to the international operations in London. Bloomberg quotes interviews from U.K. liquidators who are focusing on "apparently unwarranted payments to third parties." London employees also told U.K. liquidators that they were told to communicate with Madoff Securities through personal email accounts and not through company emails.

In making his argument before Judge Stanton, Picard told the court, "Members of Mr. Madoff's family all benefited financially from Madoff International in excess of any real contribution they appear to have made." He believes that Madoff Securities may have assets in the U.K. even if they are held under the name of Madoff International.

Clearly, there appears to be a intermingling of international assets, which will continue to make for court drama as various groups of investors -- from the U.S., U.K. and elsewhere -- lay clam to their fair share. As Picard finds other assets even more courts will likely become involved.

There are conflicting roles that will need to be sorted out -- Picard representing the investors who want to salvage some of their money and prosecutors who want to preserve evidence for possible criminal prosecutions. Obviously for investors the process has already taken too long, but if criminal prosecution is to be successful prosecutors -- and all those responsible are to join their ringleader in jail -- prosecutors need to scour the evidence before it's split up among the victims.

Lita Epstein has written more than 25 books including "Reading Financial Reports for Dummies" and "Trading for Dummies."